It certainly didn’t take long. It was ready and waiting. All it needed was someone to lead it. When that became official, it was full steam ahead and off to the races.
The Consumer Financial Protection Bureau was up and running in July of 2011, but without a director. President Barack Obama nominated Richard Cordray to be its director, but the confirmation process went at a snail’s pace. That all changed in the first week of January when Cordray was named CFPB director with a recess appointment.
Cordray’s nomination was a political football as the Senate battled within its ranks to get a confirmation hearing set. Obama had made no secret that he wanted Cordray in place and eventually used the authority of the recess appointment to install him. However, the move has been controversial in terms of whether the president actually has the authority to make this recess appointment.
The move was and was not a surprise to industry officials.
“The idea of a recess appointment has been long discussed as a possibility,” says William Sellery, executive director, Financial Service Centers of America. “With the Republicans working to keep the Senate technically in recess, such an appointment seemed unlikely. For that reason it was unexpected.”
“Not really (surprised),” says D. Lynn DeVault, board chair, Community Financial Services Association of America Community Financial Services Association of America. “The administration had been hinting that there would be a recess appoint so it shouldn’t have come as a surprise to anyone.”

Quick Field Hearing

As soon as Cordray took over the reins, it was apparent non-banks and small loans were at the top of CFPB’s list. Two weeks after his appointment, the CFPB held a field hearing on payday loans in Birmingham.
At the January hearing, Cordray acknowledged the need for “emergency credit,” but also the need to protect consumers.
“One person from Michigan told us of having to use payday loans several times and wanting them to remain available because alternatives did not exist,” Cordray said.
“And so I want to be clear about one thing: We recognize the need for emergency credit. At the same time, it is important that these products actually help consumers, rather than harm them.”
Cordray also announced the Short-Term, Small-Dollar Lending Procedures for the CFPB’s examiners on banks and payday lenders.
“Our examination authority is an important tool that will allow us to inspect their books, ask tough questions, and work with them to fix any problems we uncover,” Cordray said.
“This includes looking at the materials and strategies that are used to market the loans. Before this month, the federal government did not examine payday lenders. Some state regulators have been examining payday lenders for compliance with their state laws. We hope to use our combined resources as effectively as possible.

‘Important New Area’

“So now, the bureau will be giving payday lenders much more attention,” Cordray said. “This is an important new area for us. And the purpose of this field hearing, and the purpose of all our research and analysis and outreach on these issues, is to help us figure out how to determine the right approach to protect consumers and ensure that they have access to a small loan market that is fair, transparent, and competitive.”